How to maximize cash back with your credit card

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In a world where most people pay with plastic for convenience already, it makes sense to have a comprehensive credit card strategy in place.

After all, you’ll want to make sure you have a plan to pay back purchases you charge to your card. Not only that, but you should strive to take advantage of any credit card benefits available to you, including any statement credits or usable perks you have.

Savvy cardholders will also work to maximize the cash back they earn throughout the year. After all, it only makes sense to rack up as much cash back as you can if you’re using a credit card to pay for bills and expenses in the first place.

Try these 10 tips for maxing out your cash back earnings in 2021.

1. Evaluate your spending

Before you switch up your credit card spending strategy or consider applying for a new credit card, it’s important to consider your cash flow. How much money are you spending a month? A year? And what are the categories of your biggest expenses? If you don’t actually spend enough money on a credit card each year to cover a credit card’s annual fee, that card might not be the best for you.

2. Find cards that offer bonus cash back in your biggest categories

Once you’ve determined where you actually spend your money, you’ll want to apply for the cash back card that pays you the best dividends for your own personal finance habits. In this case, you’ve got plenty of options based on your spending habits.

Here are a few to explore:

Everyday expenses

If you want to earn more rewards on everyday expenses, you should try to use your credit card for as many bills as you can. Not only should you try to cover all your recurring expenses with plastic but see if it makes sense to use a credit card for bills like auto and homeowners insurance, daycare, utility bills and any other bills you can pay online or over the phone.

Here are some flat-rate cash back credit cards that don’t require you to track spending categories and tend to work well for everyday spending needs:

Card Rewards rate Sign-up bonus
Citi® Double Cash Card
  • Earn 2 percent back on everything you buy—1 percent when you make a purchase and another 1 percent when you pay it off.
n/a
Chase Freedom Unlimited®  
  • 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year
  • Earn 5 percent cash back on Lyft (through March 2022), Chase Ultimate Rewards purchases, dining, drugstores
  • Earn 1.5 percent cash back on everything else
Earn $200 cash bonus for spending $500 in the first 3 months

 

Capital One Quicksilver Cash Rewards Credit Card
  • Unlimited 1.5 percent cash back on all purchases
Earn $200 cash bonus for spending $500 in the first 3 months

 

Wells Fargo Cash Wise Visa® card

 

  • Earn unlimited 1.5 percent cash rewards on purchases
  • Earn 1.8 percent on select digital wallet purchases in the first 12 months
  • Earn a $150 cash rewards bonus after spending $500 on purchases in the first 3 months
Earn $150 cash bonus for spending $500 in the first 3 months

 

Dining

Dining is another category where you can really maximize rewards with the best credit card strategy in place. This is especially true if you’re someone who dines out often but also orders takeout and food delivery from time to time. Here are some of the best cards for dining and restaurant spending:

Card Rewards rate Sign-up bonus
Capital One Savor Cash Rewards Credit Card

 

  • Earn 4 percent on dining and entertainment plus popular streaming services
  • Earn 3 percent at grocery stores and 1 percent on everything else
Earn $300 bonus after spending $3,000 within 3 months
Capital One SavorOne Cash Rewards Credit Card
  • Earn 3 percent on dining, entertainment, popular streaming services and grocery store purchases*
  • Earn 1 percent on everything else
Earn $200 bonus after spending $500 within 3 months

*Additional terms and exclusions apply

Gas and groceries

If a large percentage of your money goes to gas and groceries each month, you’ll want to match up this spending with a cash back card that offers a higher rate on gas and grocery store spending. Here are some of our top picks for cards that give the most cash back on groceries and gas:

Card Rewards rate Welcome bonus
Blue Cash Preferred® Card from American Express*

 

  • 6 percent cash back on U.S. supermarket purchases (up to $6,000 per year, then 1 percent)
  • 6 percent back on select U.S. streaming subscriptions
  •  3 percent cash back on transit
  • 3 percent back on U.S. gas station purchases;
  • 1 percent back on all other purchases
Earn 20% back on Amazon.com purchases on the Card within the first 6 months of Card Membership, up to $200 back.
Plus, earn $150 back after you spend $3,000 in purchases on the Card within the first 6 months of Card Membership. You will receive cash back in the form of statement credits.
Blue Cash Everyday® Card from American Express*

 

  • 3 percent cash back at U.S. supermarkets (up to $6,000 per year, then 1 percent)
  •  2 percent cash back at U.S. gas stations and select U.S. department stores
  •  1 percent cash back on everything else
Earn 20% back on Amazon.com purchases on the Card in the first 6 months of Card membership, up to $150 back.
Plus, earn $100 back after you spend $2,000 in purchases on your new Card within the first 6 months of card membership. You will receive cash back in the form of statement credits.

*Annual Fees: Blue Cash Preferred, $0 introductory annual fee for the first year, then $95. Blue Cash Everyday, $0

Big purchases

If you want to maximize rewards and save money on big purchases, you should opt for a card that lets you earn cash back and secure 0 percent APR on purchases for a limited time. That way you can maximize cash back as you spend, but you get the chance to pay down your purchases without interest over time. Plus, big ticket items could help you meet the spending requirements for a welcome bonus on your new card.

3. Adjust spending on any cash back cards you already have

If you already have one or more cash back cards in your wallet, use the information you’ve gathered from your personal finance audit to adjust your spending habits appropriately. Why use the card in your wallet that only earns 1 percent cash back when another card you have might earn you 3 percent back on the same purchase? Paying just a little bit of attention can easily double or triple your rewards returns.

4. Don’t use just one cash back card

Just like you shouldn’t put all your eggs in one basket, it’s smart to not focus all of your cash back earning on a single credit card. While it’s great that you’re earning a high percentage of cash back for your supermarket shopping with the Blue Cash Preferred, you don’t need to settle with just 1 percent cash back on most other purchases. Keep a second card in your wallet, like a flat-rate cash back card that you can use for your spending that doesn’t qualify for a higher-earning bonus category.

5. Choose a cash back card with a solid sign-up offer

If you’re in the market to apply for a new cash back card, do your homework to make sure you’re selecting the best cash back card with a solid sign-up offer and a minimum spending requirement that you’ll easily be able to meet. There are plenty of cash back cards with welcome bonuses, check out our list below or head over to Bankrate’s directory of credit cards with welcome bonuses. Here are few mentioned in this article you can check out quickly:

Some cash back cards offer you earnings at a higher rate for a limited period of time (usually quarterly) in designated categories. Make sure you’re enrolled in these offers and max them out whenever your spending allows.

The Discover it® Cash Back, for example, earns 1 percent cash back on all non-category purchases but also offers 5 percent cash back on up to $1,500 in activated rotating bonus category spending each quarter. Max out Discover’s bonus offer and that’s an extra $75 cash back.

7. Look out for card-linked offers from your issuer

Be sure to stay up to date on any additional rolling bonus offers your credit card issuing bank has for the cash back card that you carry. These offers are normally found in your online account, have limited redemption windows and need to be opted into individually.

You can also check out our guide to credit card special offers and limited-time promotions regarding additional perks and benefits for your credit card and rewards. Card-linked offers and special promotions are ever-changing, so it helps to have a place to check for these updates.

8. Use shopping portals and cash back apps

Earn more rewards on every online purchase you make by clicking through a shopping portal for your favorite store, then paying with your favorite cash back card. Cash back apps and sites like Ibotta, Rakuten (formerly Ebates) and Dosh give you a percentage of your spending back on qualifying purchases—on top of the cash back you’re earning on your credit card. You can also earn extra cash rewards by stacking an additional after-purchase step, like scanning your receipts into an app like Fetch Rewards.

9. Use your cash back cards for everything

With a cash back card, the more you spend, the more you earn—so make sure you use your card whenever you make a purchase. This doesn’t mean that you should buy things that you don’t need. But remember the percentage back on every small purchase you make will add up.

10. Decide how you will use your cash back

Using your cash back rewards wisely is just as important as maximizing your cash back earning opportunities. Many people choose to use their cash back rewards as statement credits to offset their monthly spending but getting a rebate on money already spent isn’t the only option. Pay yourself forward with your cash rewards by saving up for a big purchase you might not otherwise buy, or invest your returns each month and let your cash back pay you longer-term dividends for the future.

The bottom line

It doesn’t take a lot of effort to begin putting pennies (and dollars) back into your pocket with cash back cards. If you take a little time to spend strategically, you’ll be racking in the cash back rewards before you know it. It’s also good to know that maximizing cash rewards means using your credit card for as many purchases as you can, but also having the ideal rewards card for your spending style.

In the meantime, you’ll also want to avoid carrying a balance so you won’t have to pay interest on your purchases. With the average credit card APR currently over 16 percent, racking up rewards won’t make any sense if you also rack up long-term debt.

Learn more: How to choose a cash back credit card

Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson began her career working in the funeral industry, which may make you wonder why she works in personal finance now. Yet, the funeral industry taught the author everything she needs to know about the value of one's money and time. Johnson left the mortuary business a decade ago in order to explore her passion for personal finance and travel the world, and since then, she and her husband have built a debt-free lifestyle that has them on the path to retire very wealthy in their 40s. Holly's love of budgeting also led to the creation of her debt payoff book, “Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love."
Edited by
Senior Editor, Credit Card Product News
Reviewed by
Credit Cards Reporter